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Federal Budget Process

The Federal Budget Process




The federal budget process is a tedious and complex practice. It involves the participation of both the executive and legislative branches, often times up to 17 months before the budget will come into effect. The main steps of the budget cycle include the President’s budget, congressional budget and appropriations actions, implementation of the budget and finally an audit and review.
The President’s Budget
While the “power of the purse” lies with Congress, due to the Budget and Accounting Act of 1921 the President is required by law to submit a budget before Congress. Included in the budget are estimates on spending, revenue, information on the performance of the economy and legislative and policy recommendations. However, the President’s budget is only a request to Congress and a proposal for consideration. While this budget does not offer any binding language, it is still regarded as a powerful directive for the executive branch to offer national policy.
The President’s budget is first discussed in the spring prior to its potential release by federal agencies, who work in accordance with the Office of Management and Budget (OMB) within the executive branch. Each agency then submits their request to OMB in late summer and early fall. These requests are then reviewed by OMB and staff within the White House. In late fall and through the end of the year, OMB “passes back” to agencies its recommendations and comments. Publication of the budget usually occurs in January. Upon the eventual release in early February, the President’s budget provides Congress with an analysis of the President’s major budget proposals and historical trends and program information. The administration is also required to release a Mid-Session Review on July 15 reflecting any economic changes or alterations due to congressional action.
The Congressional Budget Process
The congressional budget process begins after the President releases his proposal and is focused on establishing a concurrent budget resolution. The budget resolution’s main purpose is to develop a framework for Congress to consider revenue, spending and other budgetary considerations including an overall spending limit. In both the House and the Senate the Budget Committee is responsible for marking-up and reporting the budget resolution, and once passed it will have the same rules for floor consideration. The Congressional Budget and Impoundment Control Act of 1974, which established the budget process taken during the course of the year, affirms that the final adoption of the budget resolution be completed by April 15, although this deadline is often missed. While the budget resolution is signed by the President, the revenue and spending amounts designated make the basis for enforcement of budget policies through a point of order. The budget resolution provides aggregate budget levels, discretionary spending limits and allocations for each appropriations subcommittee. While these levels are viewed as ceilings, they may be adjusted due to legislative changes. 
As ruled in Section 302(a) of the Congressional Budget Act of 1974, the budget authority and outlays proposed in the budget resolution is distributed to the appropriate House and Senate committee of jurisdiction. Once these allocations are determined, the House and Senate Appropriations Committees subdivide the amounts they received to its 12 subcommittees, as stated in Section 302(b) of the Act.
Appropriations
The discretionary spending decisions made by the budget resolution are implemented through the annual appropriations process. The Senate and House Appropriations Committees have the jurisdiction of discretionary spending while individual committees of jurisdiction oversee direct spending. The President requests appropriations in his budget request, and federal agencies provide analysis and materials on behalf of the President in support of these requests. However, the appropriations process is exclusively a legislative power. The appropriations process typically starts in the House, although recently this precedent has not always been followed.   Before the full House or Senate votes on an appropriations bill, it must be considered by the appropriate Appropriations subcommittee.
The three types of appropriations measures are regular appropriations, supplemental appropriations and continuing appropriations. Regular appropriations provide funding for agencies over the course of the federal fiscal year, from October 1 – September 30. Supplemental appropriations provide budget authority for areas that have insufficient funding during the fiscal year, such as for military expenses or disaster relief. Continuing appropriations provides top-gap funding for agencies that have yet to receive regular appropriations.
Budget Reconciliation
Congress occasionally uses reconciliation legislation to bring existing revenue and spending policies into conformity with the budget resolution.  Reconciliation legislation is used to change budget authority or spending outlays of existing law. However, in recent years Congress has changed the reconciliation process to solely focus on deficit reduction.
Reconciliation starts from instructions included in the budget resolution to committees to report on existing tax and entitlement or mandatory program law. The dollar amounts used by reconciliation refer to the Congressional Budget Office baseline, and therefore a change in revenue or spending would alter baseline levels in existing law. When the budget resolution includes reconciliation directives, the House or Senate will designate the committees of jurisdiction to recommend legislation. If more than one committee in either the House or Senate proposes legislative changes, then these recommendations are combined into an omnibus bill by the Budget Committee.
The Senate has adopted a mechanism, known as the Byrd rule, which disallows provisions which do not reduce the deficit or have no budgetary effect.  While the House doesn’t have this rule, it has other parliamentary options to strike amendments which do not affect spending or reduced revenues.
 
 Below is a timeline of the federal budget process, courtesy of the Congressional Research Service.  While these dates are recommended, they are not enforced and are often times bypassed.
Deadline Action to be Completed
First Monday in February President submits budget to Congress.
February 15 CBO submits report on economic and budget outlook to Budget Committees.
Six weeks after President's budget is submitted Committees submit reports on views and estimates to respective Budget Committee.
April 1 Senate Budget Committee reports budget resolution.
April 15 Congress completes action on budget resolution.
June 10 House Appropriations Committee reports last regular appropriations bill.
June 30 House completes action on regular appropriations bills and any required reconciliation legislations
July 15 President submits mid-session review of his budget to Congress
October 1 Fiscal year begins

 

 

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